Aquaporin-5 (AQP5) is a water channel protein expressed on the apical surface of alveolar epithelial type I cells in distal rat lung, suggesting a role for AQP5 in regulating alveolar surface liquid tonicity and/or cell volume. We investigated the molecular mechanisms underlying hypertonic induction of AQP5 in primary rat alveolar epithelial cells (AEC). Steady-state levels of AQP5 mRNA and protein were increased by exposure to sorbitol (200 mM in culture fluid) for 24 h. The increase in AQP5 was not accompanied by changes in mRNA half-life. Transduction of mouse lung epithelial (MLE-15) cells and primary rat AEC with lentivirus vectors encoding AQP5-luciferase demonstrated transcriptional activation of the reporter by exposure to hypertonic sorbitol solution. Hybridization of proteins from sorbitol-treated cells to a transcription factor DNA array demonstrated induction of hypoxia-inducible factor-1alpha (HIF-1alpha) by hypertonicity, which was confirmed by quantitative RT-PCR. Cotransfections of AQP5-luciferase with HIF-1alpha and HIF-1beta expression plasmids in MLE-15 cells led to dose-dependent transcriptional enhancement, which was partially abrogated by mutagenesis of putative HIF-1alpha binding sites in the proximal AQP5 promoter. Importantly, hypertonic induction of AQP5 was significantly inhibited by preventing HIF-1alpha induction with small interfering RNA. Hypertonicity induced activation of a transiently transfected vascular endothelial growth factor (VEGF) hypoxia response element-driven luciferase construct and increased expression of endogenous VEGF. These results demonstrate that hypertonic induction of both AQP5 and VEGF is transcriptionally regulated and mediated, at least in part, by HIF-1alpha, suggesting a novel role for HIF-1alpha in modulating cellular adaptive responses to osmotic stress.